Who Tracks the Trackers? The FTC

On-going debates over Internet privacy have led to the development of “Do Not Track” options in popular web browsers such as Mozilla Firefox and Microsoft Internet Explorer. A similar option in Apple Safari allows users to block cookies from third parties and advertisers. Many users are understandably uncomfortable with having their age, socioeconomic status, browsing habits, purchasing history, and other information collected and sold. Besides the creepiness factor, the tracking is objectionable because it occurs behind the scenes, secretly. At the same time, marketers with such information are able to convey more relevant, targeted, efficient ads to the right demographic. Free markets, after all, rely on the distribution of information to consumers. Supporters of tracking also claim that many of the free internet services that users now enjoy are supported by revenue gained from the targeted advertising tracking makes possible.

Whatever one’s stance in the privacy wars, transparency should be a value both sides can agree on. On Thursday, August 9, the Federal Trade Commission (“FTC”) announced its largest fine ever, a $22.5 million fine against Google for violating the privacy of users of Apple Safari. Though Google had represented that it would abide by the wishes of users who opted to block cookies from third parties and advertisers, the tech giant found a way to circumvent the protections and tracked users anyway. It then used that data to send the users targeted ads. Thus, Google misled consumers and also violated a separate consent order it signed with the FTC in 2009.

Google defended itself by saying that a change in how Safari handled cookies led to an unintentional violation, but the record-setting fine imposed by the FTC implies that the agency rejected Google’s claims. It should be noted that the fine is technically a consent order—a settlement—and not a finding of liability or an admission of guilt by Google. Still, the large fine certainly stands as a warning to the burgeoning industry of online tracking: the FTC is tracking you.

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Notably, the day after Google was slapped with a $22.5 million fine, the FTC opted not to fine Facebook over a similar privacy matter. Even though Facebook repeatedly made information public that it assured users would remain private, the FTC ordered Facebook to submit to privacy audits but did not issue a monetary penalty. It will certainly be interesting to see how the two settlements are interpreted by the online tracking industry.

It will be interesting to see how long consumer services like Google and Facebook can stay free in this environment, and whether consumer backlash will be worse over privacy issues or being charged for services they have come to expect for “free.”